Attestation Update – A&A for CPAs

Technical stuff for CPAs providing attestation services

Posts Tagged ‘Big 4

More on the ‘tipping point’ for Big 4 firms

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Image courtesy of Adobe Stock.

Image courtesy of Adobe Stock.

If you casually pay attention to what is going on in the land of Big 4, a world far, far away from most of us in the accounting world, you might have interest in two recent articles from Jim Peterson, pondering the survivability of the huge firms. I will summarize what I think are a few highlights.

2/13 – Jim Peterson at Re:Balance – If the Big Four Went “Ex-advisory” – Deja Vu? Or Worse? – Regulators don’t like the huge consulting practices in the Big 4 and the partners in the Big 4 consulting arms don’t like the constraints on their growth, opportunities, and compensation from being tied to the audit & tax practices.

Article speculates on the impact if the consulting work were to be spun off, as happened back in 1998 through 2001.

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Written by Jim Ulvog

February 17, 2017, 9:30 am at 9:30 am

Posted in Audits, Pondering

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Fun reading for accountants

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Manual accounting records. Anyone miss those? Didn't think sol. Image courtesy of Adobe Stock.

Manual accounting records. Anyone miss those? Didn’t think so. Image courtesy of Adobe Stock.

A few fun reads for accountants:

  • Why no Hollywood movie will ever show a profit.
  • Adrienne Gonzalez is back at Going Concern, talking about the idea of TBTF Big 4 firms possibly, maybe, becoming SIFI (not likely to ever happen, but a fun read anyway).
  • Talent shortage appearing in the CPA world.
  • Research from Management of an Accounting Practice now available.

9/14/11 (yes, 2011) – The Atlantic – How Hollywood Accounting Can Make a $450 Million Movie “Unprofitable” – If you have never taken a look at the astoundingly creative accounting in Hollywood, this article will give you a superb introduction.

Several years ago I took a fraud education CPE course in which the instructor went on a tangent to explain why no Hollywood movie has ever made a profit and none of them ever will.

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Written by Jim Ulvog

January 23, 2017, 8:31 am at 8:31 am

Posted in Accounting, Other stuff

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Yet another look at the big in the Big 4 – 2016 edition

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Image courtesy of Adobe Stock.

Image courtesy of Adobe Stock.

I am constantly amazed at how massively big the Big 4 firms are in terms of revenue. Inside Public Accounting published their list of the 100 biggest accounting firms for 2016. This is quite current, since many firms have a May or June 2016 fiscal year-end.

Here’s the income number for the 10 largest firms, in millions of dollars, along with comparable data from a year ago: Read the rest of this entry »

Written by Jim Ulvog

September 7, 2016, 7:49 am at 7:49 am

Posted in Audits

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Litigation cases that could possibly take down a Big 4 firm

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Image courtesy of Adobe Stock.

Image courtesy of Adobe Stock.

If a judgment at trial were big enough, it could mean the end of a large firm. Writing on August 13th at Market Watch, Francine McKenna explains PwC faces 3 major trials that threaten its business.

That threaten its business phrase in the headline actually means could take down the entire firm.

There are three major cases, each with a serious enough impact, that an adverse ruling in any one could take out the firm. One is in court now, another expected next February, with the final one in court within a year.

Work with me as I try to process through the cases. Here is the thumbnail version.

Two lawsuits over one client

Taylor Bean & Whitaker Mortgage Corp allegedly generated massive amounts of fraudulent loans, a large portion of which were sold to Colonial Bancgroup.  Both companies failed during the financial crisis.

PwC audited Colonial Bank and allegedly did not discover the bad loans that their client, Colonial Bank, bought from PwC’s non-client Taylor Bean.

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Written by Jim Ulvog

August 15, 2016, 7:14 am at 7:14 am

More good stuff for auditors – 3/3/16

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Image courtesy of DollarPhotoClub.com

Image courtesy of DollarPhotoClub.com

A few articles for CPAs.

  • A ‘virus’ that can infect your quality control system.
  • How to quickly check if someone is licensed.
  • Risks of working for the Big 4.
  • Deep background on the Private Company Council.

2/10 – CPA-Scribo – How Internal Viruses Affect Accounting Firms – No, not the kind of viruses you were thinking. This is caused by staff doing a quick search on the ‘net to find a sample note and pull down an erroneous example, which spreads to most financial statements issued over the next year.

Charles Hall provides a frighteningly real illustration how such a virus could hit a firm.

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Written by Jim Ulvog

March 3, 2016, 8:19 am at 8:19 am

Posted in Accounting, Audits

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If the Big 4 were split up along audit, tax, and consulting lines, they would be the Big 12

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Just how big are the Big 4? They are really big.

If we took our magic wand and split up each firm along 3 product lines, the resulting firms would be larger than the currently fifth largest firm.

If we took those Big 12 firms and waved our magic wand again to split each of the 4 audit firms in half, the former Big 4 would make up 16 of the 18 largest firms.

Here is some more info. The breakout of the seven biggest firms along product lines, as reported by the Accounting Today magazine I mentioned earlier. Read the rest of this entry »

Written by Jim Ulvog

March 19, 2015, 15:13 pm at 3:13 pm

Posted in Accounting, Audits

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Concentration of accounting firm revenue, 2015 version

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The Accounting Today magazine that arrived yesterday had a supplement with info on the 100 largest CPA firms. It is available on line here with subscription and explicit permission for vendors to contact you.

Look at the revenue info for the ten largest firms: Read the rest of this entry »

Written by Jim Ulvog

March 19, 2015, 10:14 am at 10:14 am

Posted in Accounting, Audits

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